Crypto Market from the East and West VC's First-Person Perspective: A Narration for the Sake of Narration, Utterly Boring

Original Article Title: "Market from the First-tier Perspectives of the East and the West and Some Reflections"

Original Article Author: Lao Bai, Partner at ABCDE Research

Speaking of which, it seems like this is the longest hiatus of Twi updates. The reason is simple. As a blogger who never accepts advertisements, every time I write something, it essentially requires the drive to express oneself. However, the market in recent months has made it hard to evoke such a feeling. While the sluggish performance of the secondary market certainly plays a significant role, the feeling the primary market gives may be the main reason for this lack of expression.

Nevertheless, I have observed some phenomena recently and have some reflections, which may be somewhat lengthy. Therefore, I plan to break it down into three or four articles to publish separately, with the main topics being "Market from the VC First-tier Perspectives of the East and the West," "New Signs of RWA," and "Some Noteworthy Aspects on ETH and Solana."

Let's start with the first topic today

Over the past few weeks, I have had conversations with several Asian peers and found that everyone seems to have entered a "pause" or rather a "conservative" investment mode inadvertently.

Our most recent move was in January, and several peers have been similar, with cases of not making a move for two to three months or even longer being quite common.

As for the market's feeling, the two words "bored" may be the most apt description or a temporary "consensus."

This feeling of boredom is not entirely tied to the secondary market. I vividly remember that after the Luna crash, although the secondary market was sluggish, in the primary market, conversations about well-scalable projects, ZK, or innovative Defi, Gamfi, and AI projects still excited everyone. However, this sense of excitement has gradually diminished since entering 2025.

While the secondary market loses interest in any narrative after just a few days, it naturally has an emotional transmission effect on the primary market. But a more concerning worry is - have we entered a stage where the low-hanging fruits have been mostly picked, thus embarking on a long period of adjustment, exploration, transformation, a void period accompanied by corresponding intense pains? I will elaborate on this topic further at the end because the current status of Western VCs presents some differences from those in the East.

The trigger was a Defi project we invested in during the pre-seed round last year, which is currently raising its seed round. Initially, I thought that under the current circumstances of both primary and secondary markets, being able to complete the fundraising would be quite satisfactory. However, I was surprised to find out that it was significantly oversubscribed, raising several million dollars more, with several European and American VCs competing to invest. This result astonished me. While the project is indeed good, it is not of an exceptional quality to justify such high demand.

Why are we in Asia "keeping silent" while the West is constantly "firing shots," daring to Pull the Trigger at this valuation?

We discussed internally and made some irresponsible guesses, such as

1. The timing of the establishment of Western VCs is somewhat different from that in Asia, so the exit cycles are different, leading to different investment decisions.

2. Asian VCs somewhat exhibit the characteristics of being "town mayors," focusing on either trying to outperform their peers in returns or at least outperforming BTC (although in the current market situation, I believe only a few can achieve this - - ). On the other hand, Western counterparts have a stronger idealistic and long-term perspective, or in other words, as long as they can logically explain to their LP why they invested in this project at this valuation, their dedication to returns becomes secondary.

3. Purely a Deploy Fund requirement, finishing this round quickly to quickly fundraise for the next round, with a focus on collecting management fees.

The specific reasons are unclear, so for now, all we can do is guess. Therefore, in the coming weeks, I've scheduled meetings with a group of Western VC Partners and Researchers. In addition to exchanging views on the market, I also want to directly ask them about the above question. After collecting information, I will update on Twitter.

Now, let's talk about the low-hanging fruit and take this opportunity to discuss with everyone where the future of Crypto is headed.

Firstly, whether it's me personally or ABCDE, our belief in the long-term bullishness of Crypto has never wavered. This can even be considered a form of "faith," otherwise, we would not be fully engaged in this profession.

However, in the medium term, we are indeed at a crossroads. I'm not sure if it's a similar crossroads to what we saw before the DeFi Summer of 2019, so let's discuss it with everyone.

The reason for this discussion was also due to a recent period of listening to the AlliaceDAO Podcast. Three points mentioned in it resonated with me

1. Qiao mentioned that he currently feels similar to 2019, not knowing what will happen next in Crypto until the emergence of DeFi Summer in 2020, which enlightened him and provided direction.

2. They believe that over the years, Crypto has only found one Product-Market Fit (PMF), which is finance, to be more specific, trading (Dex, Cex, Perp), lending, stablecoins, and Mint (asset issuance, e.g., Pumpfun).

3 is the advice they gave to many AI x Crypto Startups. If the project's Crypto element was too forced, it was better to remove Crypto altogether and focus on pure AI. As a result, 30% of the projects indeed removed Crypto and transformed into pure Web2 projects.

Regarding 1 - In 2019, although I was already in the circle, I was simply trading coins. Honestly, I'm not sure if VCs at that time had the same "bored" feeling as they do now. However, my impression is that at least IEOs were thriving, EOS was exploring its direction, Starkware introduced the ZK concept, and many projects from the 2020 DeFi Summer were likely founded and invested in during 2018-2019. Therefore, theoretically, the primary market experience should have been better back then. In other words, the belief in "the big one is coming" should have been higher than it is now.

Regarding 2 - This point echoes point 1 and is my biggest concern in the medium term, namely - have we reached a point where the low-hanging fruit has been mostly picked, unlike in 2019, at a crossroads?

If Crypto's biggest PMF in Utility is finance, then with the DeFi Summer and subsequent years of continuous iterative micro-innovations, we have essentially reached a boundary today.

Conversely, the opposite of Utility, which Crypto is also good at - narrative direction, is undoubtedly best represented by memes. Pump.FUN pushed this direction to its limit in 2024.

In the past few years, when both Utility and narrative were uncertain about what to do, our community could at least focus on Infrastructure. From ETH to EOS to Solana, and later Aptos, Sui... I'm thinking, with Solana having Firedancer this year and Monad and MegaETH likely to launch their mainnets, have we also reached a boundary in blockchain infrastructure scalability?

Regarding 3 - At a crossroads where all three paths have reached their limits, is the only option left the final path, namely "Blockchain Modularization"? This is related to the third point mentioned above, and I also heard a similar insight on YC's Podcast.

When it comes to modularization, it's not the type of modularization like Celestia, but rather abstracting blockchain technology as a whole into a module and integrating it as a functional component into a Startup, similar to AI.

Most of the crypto projects we see now are either born entirely based on crypto, or created for the sake of crypto, rather than to solve a real-world problem. The euphemistic term for this is Crypto Native, and the pejorative description is simply staying within the circle, self-indulging within the bubble.

The Web2 AI Venture Capital circle probably has a similar issue, where many projects seem to be "for the sake of AI itself," rather than aiming to solve a specific real-world problem.

Will there be a kind of convergence, or rather a meeting, between Web2 and Web3 in the future primary market? A project must exist to solve a real-world problem. In the process of solving the problem, it should incorporate crypto elements when needed, integrate AI elements when necessary, but the original intention and purpose have nothing to do with Crypto or AI. Just like how Meituan Takeaway utilizes 5G, platform software, big data, AI task allocation... but fundamentally, it is a project born to solve the problem of dining

If the next major stage of Crypto takes this form, will everyone feel bored? Can the current form of the Crypto-native industry chain composed of Crypto VCs, trading platforms, studios, and so on still continue?

With more and more primary market projects related to Payment and RWA, to some extent, they also align with this train of thought. Recently, I have been exploring Ondo's Global Market and discussing a few RWA projects. The next post will specifically discuss the new direction of the RWA track.

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